ABSTRACT Schizophrenia (SZ) is a devastating brain disorder afflicting ~1% of population. Recent SZ genome-wide association studies (GWAS) have implicated dozens of loci, but causal mechanism for each locus is largely unknown - such knowledge would help to identify novel targets for more effective intervention. One of the most strongly associated SZ loci spans two brain-expressed microRNAs: MIR137 regulates neuronal differentiation, maturation and synaptic function, and about half of SZ GWAS loci contain MIR137 targets, suggesting a central hub role for MIR137 in a SZ gene network. MIR2682 has little known function, but it is predicted by TargetScan6.2 to target ankyrin 3 (ANK3), a gene associated with bipolar disorder in GWAS. To understand the causal mechanism underlying the MIR137 SZ locus, this R21 application will address these three key questions: 1) which of the many equivalently associated SNPs are functional, 2) which genes and in what types of neuron are affected by the risk variants, and 3) whether the risk variants impact SZ-relevant cellular phenotypes. We will leverage both the putatively regulatory common SNPs implicated by GWAS and a rare enhancer SNP identified by our resequencing. We expect the rare enhancer SNP to provide unparalleled insights on the causal mechanism because of its large effect; the risk allele was found to reduce reporter gene expression by >60%. Neurons differentiated from induced pluripotent stem cells (iPSCs) are emerging as a pathophysiologically relevant cellular model for studying brain disorders. We have shown robust expression of MIR137/MIR2682 in such neurons. Our hypothesis is that the risk alleles of both the rare and the common SZ- risk variants reduce expression of MIR137/MIR2682 in iPSC-derived neurons, resulting in SZ-relevant cellular phenotypic changes. We present a rigorous and innovative approach: 1) Instead of simply comparing a few iPSCs from SZ cases vs. controls, which is often underpowered to attribute phenotypic differences to a genetic variant due to variable genetic backgrounds between iPSCs, we will generate isogenic iPSC lines differing only at the SNP of interest by using an efficient transcription activator-like effector nuclease (TALEN)-mediated genome editing. 2) To overcome the heterogeneity of iPSC-derived neurons, we will simultaneously profile in single neurons the expression of different subtype-specific markers as well as of MIR137/MIR2682 and their target genes, and then examine within each subtype of neurons the effect of the SZ risk allele on gene expression. Combining the use of iPSC, genome editing, and single neuron expression profiling, we will pursue two specific aims: (1) To generate isogenic iPSC lines differing only at each of the SZ-risk variants on a unified genetic background, and (2) To determine in isogenic iPSC-derived cortical neurons the effects of SZ-risk alleles on expression of MIR137/MIR2682, and on SZ-relevant basic cellular phenotypes.